Group spent $1.5M on drone plan

Failed effort was worth the cost, backers say.

The Dayton Development Coalition spent more than $1.5 million in taxpayer money for the failed effort to win federal designation as an Unmanned Aerial Systems testing site, according to Rob Nichols, spokesman for Ohio Governor John Kasich.

Jeff Hoagland, coalition chief executive and president, confirmed the coalition used $1.5 million in state funds to pay a Virginia consultant to write the joint Ohio/Indiana proposal submitted to the Federal Aviation Administration. Indiana, which did not have as central a role in the planned test site as Ohio, reimbursed the state for $250,000 of the cost of the joint proposal, Nichols said.

Hoagland, in an email response to questions, said the consultant worked with coalition staff and that the coalition was paid an additional amount beyond the $1.5 million for its staff time in 2013. He wouldn’t specify the amount, but Nichols said he did not believe it was significant.

The Dayton Daily News for weeks has sought information on the contents of the 6,000-page application to the FAA and how much it cost taxpayers to prepare. The $1.5-million figure is the first time the cost of the failed effort has been disclosed.

Hoagland said the consultant was Arlington, Va.-based Strategic Growth Partners LLC, which lists aerospace, aviation and Unmanned Aerial Systems among its areas of expertise. Company officials did not respond to requests for comment.

The FAA in January announced the six sites nationwide that had been picked as official testing sites for unmanned aircraft, known as drones. Ohio, which paired with Indiana to submit one proposal, was not picked.

Alaska, Nevada, North Dakota, Texas, New York and Virginia each landed one of the coveted test sites, which are expected to attract both aerospace industry investment dollars and new jobs to those regions.

The FAA has a target date of 2015 to integrate unmanned drones into civilian airspace. The agency did not release data on how many pages the competing sites submitted; nor did it have information on what the other teams spent.

Nichols said the consultant wrote the drone proposal, and also handled front-end preparations for the FAA’s proposal request process and did planning for the Ohio/Indiana UAS Center and Test Complex in Springfield — an essential piece of the state’s plan, according to Nichols.

Even though Ohio’s proposal was rejected, Nichols said the money was well-spent, in part because the UAS Center was launched and continues to operate.

“To understand the industry and how it’s going to grow we would have to have the information anyway,” Nichols said about the research gathered for the proposal.

Dayton Mayor Nan Whaley said she was disappointed the region wasn’t chosen for a drone site but “we needed to be as aggressive as possible” in the attempt to land one of the test locations.

“I think it’s still an important opportunity for the region that we have the opportunity to grow this technology to create jobs,” she said.

Tom Franzen, Springfield assistant city manager and economic development director, said his city will continue to focus on the potential of the UAS industry. The FAA selection process was helpful to gather data on the region’s strengths in academia, industry and government, he said.

“It’s been extremely helpful in fostering those relations and giving us a better understanding of each other’s strengths and capabilities,” he said.

‘Not a lot of money’

Loren Thompson, a noted aviation and defense analyst with the non-profit Lexington Institute in Virginia, said in an email: “$1.5 million is not a lot of money to spend on attracting a federal facility that could have created hundreds of local jobs and generated sizable other economic benefits. Whether it was a wise investment comes down to the odds of winning. If Ohio and Indiana had won, we would be praising the work of the development coalition.”

Although some have questioned why anyone would submit a several-thousand-page application, Thompson said it was necessary to comply with hundreds of regulations on federal contract awards, much of it “boilerplate” paperwork.

“This is the nightmare that federal contracting has become,” he said in an email.

The FAA barred teams from partnering with federal agencies, such as the Air Force Research Laboratory, which is headquartered at Wright-Patterson Air Force Base and is a national leader in UAS technology.

Daniel Stohr, an Aerospace Industries Association spokesman, said other states not chosen, including aerospace powerhouses California and Florida, have opted to move ahead on their own.

“The thing to remember is this is a major growth opportunity for the aerospace community,” he said. The FAA’s snub of the Ohio and Indiana proposal was “not the end of the world for a place like Dayton. There’s going to be a great deal of (UAS) research done in Dayton.”

Shifting money from job training

Money for the proposal came from a $10 million allocation the Ohio Legislature transferred out of an Ohio Board of Regents workforce job training fund and placed in the current biennial budget. The state awarded the $10 million to the Dayton Development Coalition’s public-contracting affiliate, Development Partners Inc. It was earmarked for the drone proposal, other UAS and defense-related economic development efforts and to prepare for any future federal base realignment and closure (BRAC) plans.

According to the state’s contract with DPI, $2.6 million of the money will be spent on BRAC-related efforts and nearly $3.7 million will pay for UAS projects — including the drone proposal. The contract requires that DPI give $3 million to Wright State University with a goal of building “a nationally recognized research center” focused on human performance technology for the Air Force, the region and the state.

Ohio officials have not released the proposal it made to the FAA and Nichols said it will take an undetermined amount of time for the two states to redact portions that contain proprietary information or are forbidden by law from being released.

In his email response, Hoagland said the “FAA draft submission was prepared by coalition staff, consultants, and about 80 partners in Ohio and Indiana.” State of Ohio officials also reviewed the application before it was submitted to the FAA.

“Different partners reviewed different sections based on their technical expertise and knowledge of the subject,” Hoagland wrote.

Those partners included the University of Dayton Research Institute, Wright State University, Ohio State University, the staff at Springfield-Beckley Municipal Airport and others. JobsOhio and UDRI were among those who reviewed the economic development part of the proposal, according to Hoagland.

‘Never the cornerstone’

Coalition leaders and state and local officials have downplayed the state’s failure to win the FAA testing site designation, saying research and development efforts in the UAS arena will continue without the FAA designation.

In a statement released last month after the FAA decision, Hoagland said: “An FAA test site — though much desired — was never the cornerstone of the regional UAS strategy.” He said Ohio is a strong aerospace center and innovator in the aerospace industry and those strengths offer more opportunities for job creation than the federal test site designation.

But it was clear before the FAA decision was made that officials had high hopes that winning the testing designation would bring new jobs.

In 2012 the coalition prepared the Dayton Region Comprehensive Economic Development Strategy, a document that is necessary to obtain some types of federal funding. It includes a discussion of the effort to win the UAS test site designation and says officials are “in negotiation with a number of large UAS manufacturers who desire to locate in the Dayton Region if access to national airspace for UAS testing and evaluation is secured.”

In his email response this week, Hoagland said, “We are disappointed we did not get designated as one of the six test sites, but the true failure would have been not to apply and simply accept status quo for the region.”

Maurice McDonald, the coalition’s executive vice president for aerospace and defense, used a sports metaphor to make the point.

“Asking whether the money was well-spent is like asking a runner if it was worth the fee to enter a race he didn’t win,” he wrote. “We had a strong chance of winning and competing was worth the effort.”

Our reporters have provided the most comprehensive coverage of Unmanned Aerial Systems research and its importance to the region’s economic development. The newspaper closely followed the area’s proposal for an FAA test site and continues to gather records that shed light on how well public money is being spent to develop the technology.